How much to live on

shinytop

Xbigman said:

Just looking at costs. These are 2021 to 2022 tax year figures.

Food                                   1976
C Tax                                  1225
Gas and Electric                   480
Water                                    205
Mobile                                    20
Mobile broadband                 216
Xmas/Birthdays                     140
Xmas costs                             30
Spending money                   520
ebike maint.                            80


Total                                    4892
Pension                               4013
Shortfall                               1245

Shortfall is made up by some dividends (about 770) and running my cash down over the next 9 years.

I have money set aside for a new boiler, new ebike, set of white goods, house maint and a small emergency fund. 
Its very doable as long as I'm sensible.

Not in my figures is the money available from paying into a SIPP each year and claiming the tax back. There's a big thread about this on the retirement board (the paying 2880 into a pension one) which is well worth a look for those on small retirement incomes who are NON tax payers. I haven't included it in my figures because I haven't done it yet and the pension rules might change and it have to stop so I don't want to plan for money that might not arrive later. If I do get that money in I plan to add the first few years of it to my emergency fund and then in future years use most of it for extra spending money. 


Darren

Make sure you do SIPP £2880 thing this FY; it really is free money and quite a lot if you're below the BR tax threshold.  Never say never but it'd be a difficult one to justify abolishing. 

scottish_lassy

right, I have been on the Govt gateway and this is what it says.  I also have £48.28 Estimated COPE.  I REALLY don't understand all this pension terminology and could do with a crash course for Dummies!!  It says I have 42 full years contribution with one year not complete (I will correct that as it is the year I had my child).  So, questions - do I need to do anything re being 'contracted out' for a period?  If I amend the one year that is down as not full, could I retire and still qualify for this full pension?  Do I get my work pension estimate on top of this????

You need to continue to contribute National Insurance to reach your forecast

Estimate based on your National Insurance record up to 5 April 2020

£170.64 a week

Forecast if you contribute another year before 5 April 2028

£175.20 a week

£175.20 is the most you can get

mark55man

so Ignore COPE, it was just there to calculate whether you were better off under the new scheme or the old scheme.

what you have posted says you are very nearly home and dry, as you only have one year of contributions to make before you are at your peak.  those contributions ca come from 

a. you working - as per the rest of your life ie more that £130 pw average for the year
b. paying voluntary contributions - or about £15a week.  Thus £750 quid or so will buy you £4.56 a year (as you can't exceed 175.20.  Thus you only need to be retired for more than 3 and a half years to break even
c.  If you are self employed and fill in a self assessment you can claim a different class of NI contributions which are about £5 pw  for the same benefit.  Here you need only to draw your pension for just over 1 year to be up on the deal

Plenty of threads on the pension boards, which are from more technically correct people in terms of which class is which

your work pension is usually separate from this.  in some cases the pension is tied to your state pension - that would be a question for the pensions board - they're very nice really

scottish_lassy

Could the one year additional contribution come from the one year I have to amend - therefore 'home and dry' already?

annielyn

scottish_lassy said:

Thank you so much everybody.  I certainly don't live an extravagant lifestyle and enjoy pottering.  The reason this has come up just now is that work are making a one time offer for early retirement.  I don't even know if my application would even be considered as I don't think my post is expendable but it got me thinking 'do I work on and on and maybe not even be able to enjoy retirement when it comes.  Maybe accepting a lower income and having 'time' to enjoy would be more precious.

I think you've hit the nail on the head here. You really can't put a price on having the time to enjoy your retirement.
My husband decided to take early retirement 3 years ago at 58. We had already made overpayments on our mortgage so we were MF which made the decision easier. Putting his pension into drawdown allows us to draw around 13k a year and with my additional SE income of around 6k we are managing to live a comfortable life while we are still young (and healthy) enough to enjoy it.  We have seen too many people (my father included) not even make it to retirement age so we are making sure we enjoy every moment. If you get the chance I'd say go for it.

mark55man

scottish_lassy said:

Could the one year additional contribution come from the one year I have to amend - therefore 'home and dry' already?

Possibly but it depends on how long ago - hopefully without presuming too much if you are nearly at retirement age, then the year when you had just had your child would be a while ago.  I think you should ask a specific question on the pensions board as there are technicalities about how far back you can go, and maybe even it depends on when in the year you got child benefit.  I don't know and neither of us should be guessing.  But the good news is you are very nearly there but I never met a £5 a week that I'd say no to, and certainly worth a bit of research - at the very least to work out if you need to be putting anything aside to do one of the other methods

p00hsticks

scottish_lassy said:

Could the one year additional contribution come from the one year I have to amend - therefore 'home and dry' already?

What do you mean by 'have to amend' ? Do you think the HMRC records are wrong ?

If you have 42 years contributions already it's most likely that filling any years prior to 2016-17 won't have any impact on your pension forecast - that extra year you need probably needs to be one between 2020-21 and 2027-28.

As it sounds like you are still working, chances are you may have fillled 2020-21 already ... check again later in the year when HMRC have updated their records after the end of the current tax year.

doingitanyway

Anyway of going back to, How much to live on?
I was so enjoying a place away from the issues covered constantly on the pensions and retirement thread...

mark55man

good point DIA, well made, 

I think for me the struggle (I'm in planning phase for how much to live on) is the balance between essential, need and want.  Current prices for me and OH but assumes that the kids have either fled the nest or are self sufficient on a day to day basis, which is largely true at the moment and becoming more true.  
* Essential is like utilities, tax, basic food, insurance 
* need is a bit of variety and things to support staying busy, UK holiday, going out once in a while - but not quite essential
* want is the discretionary end of the scale - and is basically the same as need but more so (eg sunnier, up market, more meals/trips out)

So for me essential and need is prob going to be about £1500pm - 
* £2k council tax 
* £2k utilities, insurance
* £1k BB, mobiles, TV and streaming services
* £5k food / clothes / shopping
* £2k ongoing house maintenance / upkeep
* £2k car and costs
* £1k Holiday
* £2k hobbies and interests
* £1k - Large Family costs and (post pandemic) entertainments !!
I would say the essential/bare minimum is maybe £1200pm (I have a lot of fixed costs) and the likely spend (with a few wants) maybe closer to £2k per month - which would be comfortable and affordable

Amateurretiree

We are 58 and 62, both fully retired.
Our ‘essentials’ are 1000 a month. This is all utilities, Council Tax, Broadband, Buildings insurance etc and food. So we could live on this if we had to, but we couldn’t do any improvements to the house, replace furniture or go on holiday.
Luckily my NHS pension covers the basics with a small amount left over to spoil our granddaughter.
Luckily DH has a SIPP in drawdown( not massive but hopefully enough to last us) for the ‘extras’
We will both obviously be eligible for state pension in 4 yrs for DH and 8 yrs for me.
We are very much willing to draw in the reins to essentials only if the need arose, and I think this flexibility is important in making sure your money lasts.